One of the largest bitcoin exchanges in the world will not support bitcoin cash

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PHOTO - A Bitcoin sign is seen in a window in
TorontoThomson
Reuters

Bitcoin will likely split into two separate currencies
following a brutal civil war among
crypto-powerbrokers.

Coinbase, one of the largest cryptocurrency exchanges,
however, will not back bitcoin cash, a fork of the
original bitcoin.

The conclusion of the bitcoin civil war is fast approaching.

And Coinbase,
one of the largest cryptocurrency exchanges in the world,
has made its position in the fight clear.

To recap, bitcoin has been embroiled in a years-long civil war
because the underpinning network has slowed as the
number of people using the currency has increased.

On one side of this war, there are the so-called core developers
who want to keep the blocks that make up the network limited in
their size to protect against hacks. On the other side, are the
miners who want to increase the size of blocks to make the
network faster.

There are several potential solutions for speeding up the
platform. Until last week, the solution known as Segwit2x, which
would increase the size of bitcoin blocks to two megabytes, was
slated to become the standard after the August 1 deadline. Then,
bitcoin cash came along. The new solution is a fork of the
bitcoin system: it's a new software that has all the history of
the old platform but bitcoin cash blocks will be
eight megabytes.

And if the fork in the bitcoin blockchain were to take place,
Coinbase would not back the bitcoin cash version.

"In the event of two separate blockchains after August 1,
2017 we will only support one version," David Farmer, director of
Biz Ops at Coinbase, wrote in a
blogpost. "We have no plans to support the bitcoin cash
fork."

Coinbase has served nearly 9 million customers across 32
countries, according to the firm's website. The firm
has enabled the exchange of over $20 billion worth of digital
currency.

Farmer said Coinbase decided not to back bitcoin cash
because "it is hard to predict how long the
alternative version of bitcoin will survive."

Bitcoin cash came out of left field, according to Charlie
Morris, the chief investment officer of NextBlock Global, an
investment firm with digital assets.

"A group of miners who didn't like SegWit2x are opting for this
new software that will increase the size of blocks from the
current 1 megabyte to 8," Morris told Business Insider.

According to Morris, as soon as the split takes place most
people will see their bitcoin holdings double. But that doesn't
mean the value of investors' holdings will double.

Morris told Business Insider that bitcoin cash (BCC) has
been trading in the futures market for about $200 to $400. Thus,
if a split were to occur BCC would trade somewhere in that range
while the value of bitcoin would witness a decline equal to
the value of the new bitcoin.

"It will be similar to what happened with Ethereum when Ethereum
classic came on the scene," Morris said."The two currencies
marketcap equaled out to the marketcap of the original
Ethereum."

But since Coinbase won't back the new bitcoin cash, folks who
hold their bitcoin on Coinbase's system won't see their bitcoin
supply double. As such, if the price of bitcoin were to
decline as a result of bitcoin cash entering the market place,
then Coinbase users would witness the value of their total
bitcoin holdings decrease.

That's the reason Morris thinks people could benefit from putting
their bitcoin into a private wallet.

"If you're holding it in an exchange, then they might not give
you the bitcoin cash," Morris said.

Over the weekend, Coinbase experienced delays in its processing
of bitcoin withdrawals. They are currently operating as
normal.